There are a number of different tax forms that must be filed, and the more money you make, the more forms you are likely to have to file. When you are a LLC member, you will find that there are a number of additional forms that you have to fill out over and beyond the ones that you are familiar with. In addition, you will have a number of forms that will be sent to you so that you know that everyone is doing what they are supposed to be.
The Form 1040
Almost everyone who is a business owner of any kind will file the 1040 so that they can take advantage of itemized deductions for their business. For some people, this is the first form they will begin with and may be the most confusing. Many people think that the LLC does not pay taxes, which is technically true, however each of the members do pay taxes on their individual share of the profits of that company. Taxable amounts that go on this form include all of the profits whether they were used or not- even amounts left in the business are taxable and should be reported on this, the first of the LLC tax forms.
The Schedule C
For a LLC that is a sole owner, the Schedule C is attached to the Form 1040 to report profits and losses for the previous year. This is a secondary form that reports the amounts of profits for the company whether they were used or left in the company to cover future expenses.
Download Schedule C (Form 1040)
The Schedule E
For a multi owner LLC or a partnership LLC, each member will pay taxes on their own share on this LLC tax form. The amount they are given is called a distributive share and is determined by the operating agreement. Whether or not the money was actually distributed, the amount must be reported and taxes paid on it.
Download Schedule E (Form 1040)
This LLC tax form is used to determine if all income is being reported correctly. In addition to this form, the LLC must give all members a K-1 which breaks down the profits and losses for each member. Copies of these forms are sent to the IRS as well.
LLC members are not employees; they are considered to be self employed business owners and must file this form with the IRS to report their earnings.
The LLC tax forms allows for certain deductions to be taken for each member based on their operating expenses, the cost of some equipment, the cost of travel and other allowable costs. Certain business costs can also be taken, however many of them can only be deducted one time during the lifetime of the business in question. Start up costs for instance should only be deducted once.